Layoff announcements by large companies very low, while small companies are shrinking workforce

ADP employment fell 39,000 in September, a weaker than expected reading. August ADP employment was upwardly revised to +10,000 from an initially reported 10,000 decline.

Service-producing employment rose 6,000 in September, while employment in the goods-producing sector dropped 45,000 with manufacturing employment down 17,000 and construction employment down 28,000. Financial services jobs fell 13,000 in September.
Challenger reported that layoff announcements were 37,151 in September versus 34,768 in August. Layoff announcements in September 2010 were 44.1% below September 2009’s level.

Layoff announcements in the third quarter were the lowest since the second quarter of 2000 and planned layoffs remained below levels that prevailed during much of the last expansion. However, while layoff rates are very low, uncertainties about the tax and regulatory environment are restraining job creation.

ADP has tracked about 80,000 below private payroll growth so far this year and, as a result, the decline in payrolls does not necessarily point to a fall in private payrolls in September on the BLS data.  ADP is more reflective of hiring conditions at small business (who are more likely to outsource payroll processing) than at large companies (where layoff announcements are at very low levels). Nonmanufacturing ISM suggests that employment growth was little different than seen in recent months and jobless claims have fallen in September. From the Fed’s perspective, which has highlighted unemployment in its upcoming decision about more QE, these data make it more likely that payrolls will not be strong enough to prevent the Fed from initiating a new QE program on November 3.


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